Strike throws Verizon

Every adman's nightmare is stalking the Verizon Communications marketing department: A company crisis is corrupting the message of a new advertising campaign.

Specifically, a campaign introducing New York-based Verizon's new name and touting the telecommunications giant's reliability debuted on Aug. 1, only to be followed four days later by a disruptive strike by 87,000 workers. (At press time, it appeared the two sides might be moving closer to a settlement.)

Some observers questioned the wisdom of proceeding with the campaign in the shadow of a looming strike. "Sometimes you're better off to pause and reconsider Plan A and go with Plan B," said Barry McLoughlin, president-CEO of media consulting firm Barry McLoughlin Associates Inc. "You could be inadvertently branding yourself with a lot of trouble."

But Verizon, the company created by the merger in June of Bell Atlantic Corp. and GTE Corp., has taken a "damn the torpedoes, full speed ahead" approach to its marketing communications aimed at businesses and consumers. The company has so far refused to scale back the campaign, which includes television, radio, print and outdoor and was created by The Lord Group, Temerlin McClain, Burrell Communications and La Agencia de Orci & Asociados.

"It is important to let our customers know that this is our new identity," explained John Bonomo, a Verizon spokesman. "They'll be seeing it first and foremost on their bills and also on our trucks and on payphone ID cards."

Some branding experts agreed that circumstance forced Verizon to launch its new brand, no matter how a strike might sully it. "They've crossed the Rubicon," said Al Ries, chairman of branding consulting firm Ries & Ries Inc. "They're not going to want to wait too long. That's going to give them a lot more problems."

Undercutting the image

Nonetheless, the strike undercuts the new image Verizon wants to project in two major ways, industry observers said.

First, the campaign is built around the theme of reliability and includes such copy as: "New name. Same reliable pay phones." The strike, however, has caused disruptions in directory assistance, installation and repairs.

While acknowledging those setbacks, Verizon pointed out that calls are still being completed. "The network is humming right along. The network continues to operate, thanks to 30,000 managers on the job," Bonomo said.

The danger, however, in running the ads trumpeting Verizon's reliability is that they can be interpreted as a lack of awareness on the part of the company. "People watching the news and seeing the strike might remember the ads and ask, `How come they're talking about this, when they should be talking about that?'" McLoughlin said.

Second, the strike calls into question the nimble and responsive image Verizon wants to communicate, especially to business customers. Like other former Baby Bells, Verizon is facing new challenges from competitive local exchange carriers and other aggressive new entries into the telecom arena.

"It's a huge embarrassment at a time when you're trying to position yourself as lean and mean and agile, as a next-generation service provider," said Jim Slaby, senior industry analyst for Giga Information Group. "But then you've got this [strike], which is making you look much more like an old-school phone company that just doesn't get it."

Abandoning brand equity

The desire to be perceived as a forward-looking company explains why Verizon chose its new name in the first place, abandoning the brand equity of Bell Atlantic and GTE as both too geographically limiting and too old-school, observers said.

"They don't consider the Baby Bell legacy to be a big asset," Slaby said. "That technology and business practices and attitudes toward customer service hark back to the bad old days of monopoly, which is why Southwestern Bell isn't Southwestern Bell anymore, it's SBC."

The strike's timing led some to speculate that the Communications Workers of America and the International Brotherhood of Electrical Workers, the two unions representing the strikers, believed the company would bend over backward to avoid a work stoppage. "Unions do pick vulnerable times to hold strikes," McLoughlin said.

Both Bonomo and a union spokesperson denied this, citing the fact that the contract expired at midnight Aug. 5. "The dispute doesn't involve tactical machinations to that degree," said Jim Spellane, IBEW communications director. "The dispute is over the future direction of the company and the role of the unionized work force."

Despite the battering its image took in the first few days of the strike, Verizon continued to conduct business and issue press releases, which have included both good and bad news for the company.

For example, on Aug. 8 it unleashed a fusillade of press releases. In one announcement, it announced its $800 million acquisition of NorthPoint Communications Group Inc. The deal bolstered Verizon's digital subscriber line business, positioning the company to offer improved broadband services.

Also that day, Verizon issued its quarterly financial report, which included increases both in revenue and net income. Yet another press release dampened that news as Verizon issued an earnings warning related to the strike. Verizon's share dove 11% on the news to $42.50.

Some speculated that the press release barrage was calculated to draw attention away from the strike. "I believe intuitively that this is their approach," McLoughlin said. "Let's drown out the news by brand awareness message as much as we possibly can."

Bonomo countered, "These are things that take place because you have to run the business despite the fact that we have a strike going on."

Some observers theorize that the strike has, ironically, helped Verizon. "If anything [the strike] is combining with the ads to enforce the name change," said Kenneth Dulaney, VP-mobile at analyst firm Gartner Group Inc.

Most observers agreed that if the strike is settled quickly, there will be little lingering damage. Three years after its debilitating strike, United Parcel Service of America says it has more than restored its package handling and revenue levels.

But the timing of the Verizon strike, especially with new, smaller competitors on the horizon, couldn't be more inauspicious for the company. "With all those small, agile mammals ready to steal their eggs," Slaby said, "there couldn't be a worse time to behave like a dinosaur."